Kellogg School Of Management Professor Wrote A Paper On How Herbalife Is NOT A Pyramid Scheme

Activist investor Bill Ackman has generated a great deal of buzz since revealing his massive short position on Herbalife -- a multi-level marketing company that sells weight loss and nutritional supplements -- but that doesn't mean everyone agrees with him.

Ackman's hedge fund Pershing Square Capital Management believes the company is a "pyramid scheme" and is shorting around 20 million shares with a price target of zero.

By pyramid scheme, Pershing Square believes that Herbalife's distributors earn more than 10 times by recruitment than selling the product to actual retail consumers [.PDF]. This, Pershing Square says, incentivizes them to bring in new recruits who will only be disappointed at the bottom.

Herbalife will hold an analyst and investor day on Thursday to rebut Ackman's claims.